chapter 11: managing health expenses garman/forgue personal finance tenth edition ppt slide program...

Chapter 11:Managing Health Expenses

Garman/Forgue

Personal FinanceTenth Edition

PPT slide program prepared by Amy Forgue and Ray Forgue.

Copyright ©Houghton Mifflin Company. All rights reserved. 11 - 2

Introduction

Health care issues that impact personal finances

1. Direct Medical Care Costs

2. Rehabilitative and Custodial Care Costs

3. Lost Income


Your Next Five Years

In the next five years:

1. Sign up for an employer-sponsored premium conversion plan and a flexible spending arrangement for health care, whenever they are available, to save money on taxes.



2. Consider using a high-deductible health care plan and health savings account if you are unable to afford the high costs of an HMO or traditional health insurance plan.

3. Always maintain coverage for direct health care expenses when changing employers using the COBRA law or a short-term health plan for protection.



4. Take advantage of employer-sponsored long-term disability income insurance if available or consider purchasing protection individually.

5. Regularly reevaluate your need for long-term care insurance against your resources for providing such care on your own.


Learning Objective #1

Identify ways that people can manage the financial burdens resulting from illness or injury.


Addressing the Financial Burdens of Illness or Injury

Group Health Plans are sold or provided collectively to an entire group of people rather than to individuals.



Covering Your Direct Medical Care Costs

Health Maintenance Organizations (HMOs)

Traditional Health Insurance

High-deductible Plans

Medicaid, Medicare Parts A and B



Covering Your Rehabilitative and Custodial Care Costs

Long-term care insurance Covering Your Lost Income

Disability Income Insurance

Social Security disability income insurance

Concept Check 11.1

List three ways that group health plans are better than individually purchased plans.

Identify the five mechanisms available to help people pay for direct health care costs.


Concept Check 11.1

Explain why someone might want to purchase long-term care insurance.

Explain how someone might replace the income lost due to illness or injury.




Distinguish among the types of protection for direct health expenses.


Sources of Protection from Direct Medical Care Costs

Health Care Plans

Changes to your group plan can be made during the open-enrollment period.


Sources of Protection from Direct Medical Care Costs

Health Maintenance Organizations Individual Practice Organization HMOs, Managed Care Plans Primary-Care Physician


Traditional Health Insurance

Health Insurance

Comprehensive Health Insurance

Indemnity Plans

Preferred Provider Organizations


Consumer-Driven Health Care

High-Deductible Health Care Plan

Health Savings Account (or HSA)

Health Reimbursement Account (or HRA)

Concept Check 11.2

Distinguish between health maintenance organizations (HMOs) and traditional health insurance.

Identify two benefits of selecting a preferred provider organization (PPO) when seeking health care.


Concept Check 11.2

Explain the linkage between high-deductible health care plans and health savings accounts (HSAs) and health reimbursement accounts (HRAs).




Describe the general benefits and limitations of health care plans.


Making Sense of Your Health Plan Benefits

Certificate of Insurance: Paper or booklet that outlines group health insurance benefits.



What Types of Care Are Covered? Dental expense insurance

Vision care insurance

Preexisting conditions



Who Is Covered

When does coverage begin and end? Optionally renewable policies

Guaranteed renewable policies

Noncancelable policies



How Much Must Your Pay Out of Your Own Pocket?

Deductibles

Copayments

Coinsurance


Policy Limits Item limits

Episode limits

Annual limits

Lifetime or aggregate limit


Coordination of Benefits

Coordination of benefits clause

Maintain your medical care plan between jobs. COBRA rights

Portability option

Concept Check 11.3

What are preexisting conditions and how do they affect coverage under health plans?

Distinguish among a deductible, a copayment, and coinsurance.

Explain COBRA rights and portability rights that apply when you leave a job that has a group health care plan.


Concept Check 11.3

Distinguish among item limits, episode limits, time period limits, and aggregate limits as used in health care plans.

Distinguish among optionally renewable, guaranteed renewable, and noncancelable health care plans.

List three ways you can save on taxes when paying for health care or insurance.




Develop a plan for protecting your income when you cannot work due to disability.


Protecting Your Income During Disability

Disability income insurance

Social Security disability insurance



Important disability income insurance policy provisions: Waiting period (or elimination period)

Benefit period

A longer waiting period will help you afford a longer benefit period.



Important disability income insurance policy provisions: Degree of disability

Own-occupation or any-occupationSplit-definition policiesResidual clause

Social Security rider Cost-of-living adjustments

Concept Check 11.4

Explain how you determine your level of need for disability income insurance.

Identify the major policy provisions to consider when purchasing disability income insurance.


Concept Check 11.4

Distinguish between any-occupation and own-occupation disability income insurance plans.

Describe how you might adjust the waiting period on a disability income insurance policy in order to affordably obtain a longer benefit period.




Explain how to protect yourself from the expenses for long-term care.


Planning for Long-Term Care

1. The degree of impairment required for benefits to begin

Activities of Daily Living (ADLs)

2. The level of care covered Skilled nursing care Intermediate care Custodial care


Planning for Long-Term Care

3. The person’s age

4. The benefit amount

5. The benefit period

6. The waiting period

7. Inflation protection

Concept Check 11.5

Describe the protections provided by long-term care insurance.

Distinguish between the benefit period and the waiting period for a long-term care policy.

List three aspects of long-term care insurance that affect the cost of a policy.



The Top 3 Financial Missteps In Managing Health Expenses

People slip up in managing health expenses when they do the following:

1. Go unprotected for health care when changing jobs.


The Top 3 Financial Missteps In Managing Health Expenses

2. Duplicate employer-provided health care protection with your employed spouse.

3. Ignore the need for disability income insurance.


Do It NOW!

Maintaining coverage in a health care plan is essential to protect your future financial success. Start today by:

1. Learning exactly what group health care coverage you actually do have through your job, your school, and/or your parents.


Do It NOW!

2. Investigating the possibility of saving on income taxes via a premium conversion plan, flexible spending arrangement, or health savings account (HSA).

3. Identifying one behavior that you engage in that could lead to health problems later in life and taking steps to reduce their impact.

chapter 11: managing health expenses garman/forgue personal finance tenth edition ppt slide program...

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